Housing affordability is at its highest in years (highly impacted by falling home values and low mortgage rates). Now, inventory is dropping while the demand stays high. The result is fierce competition. Investors are pouncing on the good prices with the upper hand of doing cash only deals while traditional home-buyers can only watch or get ready for a head-to-head battle.
"Rents are going up, and as long as there are properties at the level where investors can get the positive cash flow, they will continue to invest," says Jed Smith, managing director of quantitative research for the National Association of REALTORS.
Homes are becoming more affordable than monthly rent. Only 59.5% of tenants intend to renew their lease for the year to come.
Fannie Mae, Freddie Mac, and the FHA have raised their loan fees which results in pricier mortgage rates. "Those who don't have credit scores in the high 600s to low 700s may be forced to go the FHA route," says Ed Conarchy, a mortgage planner at Cherry Creek Mortgage in Gurnee, Ill. "And they will be stuck with the higher fees."
Source: “5 Mortgage and Housing Trends in Spring 2012,” Bankrate.com (April 21, 2012)
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